Voyager solicitor 'overbilled millions'

By Andrea Petrie

23 November 2010 — 3:00am

THE solicitor who represented almost half of the litigants in Australia's longest-running compensation battle is under investigation for allegedly obtaining millions of dollars of clients' money by unlawfully double-billing them - among other serious trust accounting breaches.

David Forster, of Hollows Lawyers, handled 89 of 214 personal injury claims against the Australian government by survivors of one of Australia's worst peace-time disasters, the 1964 collision between the Navy destroyer HMAS Voyager and the aircraft carrier HMAS Melbourne.

The collision between the HMAS Voyager and the aircraft carrier the HMAS Melbourne was one of Australia's worst peace-time disasters.

Eighty-two men died and several others were injured when the Voyager sailed under the bows of the Melbourne. The Voyager was split in two during a night-time tactical exercise about 20 land miles off the Australian coast.

The government paid millions in compensation to victims for physical and mental damage, which included several claims of post traumatic stress.

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One client, Russell Norrish, received just $72,000 after his fees were deducted, even though the government paid him more than $412,000.

On average, the claims took nine years to reach settlement.

Mr Forster still holds his legal practising certificate and now works for Whistleblowers Lawyers.

A Victorian Supreme Court judge has ruled that the discrepancies breached the Legal Profession Act and the Legal Profession Regulations.

Justice Karin Emerton said she was satisfied the law practice had ''committed serious irregularities in relation to trust money'', especially through double payments of expenses.

The irregularities were discovered during an inspection of Hollows's trust accounts in late 2008 by the Law Institute of Victoria after complaints were lodged by Hollows clients.

An analysis of 12 files by the institute's inspectors found that three files had the same expenses billed twice to the client, which were then paid twice. The expenses included fees for medical reports and barristers, court charges and phone bills.

In nine of the files, disbursements were billed once and paid once from funds held in trust for the client, but then subsequently deducted from settlement money Hollows received on behalf of the client.

GST was also charged on amounts that had already included GST and final statements were not sent to clients on completion of settlements.

The practice also failed to disburse trust money as directed by some of the clients, and did not pass on discounts given by barristers.

Other irregularities included ''double-dipping'', or charging several clients for the same work. And in some cases clients were billed more than 24 hours in one day, the greatest time being 557 hours at $450 an hour.

A staff member alerted Mr Forster to possible billing irregularities in 2007, but he did not follow it up.

The Supreme Court appointed receivers in April to take a closer look at the firm's accounting records at the request of the Legal Services Board. The receivers, Hall & Willcox, have since brought in forensic accountants from Deloitte.

Justice Emerton last week granted the receivers an extension so the probe could continue, despite heavy opposition by Mr Forster.

Mr Forster's lawyer, John Arthur, said he believed the extra time was needed so the ''trust accounts deficiencies can be created'', a claim that the judge said had no basis.

''What this comes down to is unsubstantiated and strenuously resisted allegations of overcharging,'' Mr Arthur told the court.

Asked by counsel for the receiver, when he took the unusual step of giving evidence, if he had reaped $17.8 million in professional fees over the past seven years, Mr Forster said: ''I don't have a clue.''

He has blamed the errors on legal accounting software used by the practice, called Infinity Law, but Justice Emerton has dismissed this as the cause.

But she ruled that she did not believe the breaches were deliberate.

''The double payment and double billing of disbursements, were most likely inadvertent, they occurred because the law practice did not pay sufficiently close attention to its trust accounting obligations when settlement monies started to flow in from the Commonwealth,'' Justice Emerton said when she ruled that receivers should be appointed.

She said it appeared Mr Forster ''may have been unduly hasty in taking his professional fees''.

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''I have come to the conclusion that the defendant was careless in dealing with settlement monies and that many of the problems that arose could and should have been avoided by careful trust account management as required by the act and regulations,'' she said.